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CUNA Files a Joint Amicus Brief in Case on CFPB Structure
Tuesday, March 14, 2017 6:40 AM

Credit Union National Association joined several other groups Friday in filing an amicus brief in a court case that originally found that the Consumer Financial Protection Bureau’s structure was unconstitutional; however, this decision has since been vacated. The U.S. Court of Appeals for the D.C. Circuit granted the CFPB’s petition for an “en banc” re-hearing of the case, meaning it will be heard before all judges of the court. Oral arguments are scheduled for May 24, 2017. 

The PHH decision last year was a landmark ruling, which if it stood, would have changed the accountability structure of the CFPB. The court found that, “As an independent agency with just a single director, the CFPB represents a sharp break from historical practice, lacks the critical internal check on arbitrary decision-making, and poses a far greater threat to individual liberty than does a multi-member independent agency.” It further added that, “All of that raises grave constitutional doubts about the CFPB’s single-director structure.” 

It also struck language from the Dodd-Frank Act saying the CFPB director can only be removed with cause. The most important takeaway from the rule being vacated is that it means the President cannot remove the CFPB director “at-will” unless the court rules on this issue again. 

While the review is not limited to these points, the court directed the parties to address the following issues in briefs:  

  1. Is the CFPB's structure as a single-director independent agency consistent with Article II of the Constitution, and, if not, is the proper remedy to sever the for-cause provision of the statute?
  2. May the court appropriately avoid deciding that constitutional question given the panel's ruling on the statutory issues in this case?
  3. If the en banc court, which has today separately ordered en banc consideration of Lucia v. SEC, 832 F.3d 277 (D.C. Cir. 2016), concludes in that case that the administrative law judge who handled that case was an inferior officer rather than an employee, what is the appropriate disposition of this case?  

CUNA has decided to participate on a joint trade association amicus brief that focuses on the non-constitutional issues in the case (as other amici will be providing arguments on the constitutional issues in the case). There will be several financial trade associations signing on to this amicus brief. The brief applauds the court for the previous decision it rendered on the RESPA, statute of limitations, and retroactivity issues and discusses the need for regulatory certainty and due process, noting that RESPA is one of the most important statutes that govern the mortgage industry.